[Federal Register Volume 63, Number 11 (Friday, January 16, 1998)]
[Notices]
[Pages 2664-2671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1164]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-337-803]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Fresh Atlantic Salmon
From Chile
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: January 16, 1998.
FOR FURTHER INFORMATION CONTACT: Gabriel Adler or Kris Campbell, Office
of AD/CVD Enforcement 2, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)
482-1442 or (202) 482-3813, respectively.
SUPPLEMENTARY INFORMATION:
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to Department of Commerce (Department)
regulations refer to the regulations last codified at 19 CFR part 353
(April 1, 1997).
Preliminary Determination
We preliminarily determine that fresh Atlantic salmon from Chile is
being sold, or is likely to be sold, in the United States at less than
fair value (LTFV), as provided in section 733 of the Act. The estimated
margins are shown in the Suspension of Liquidation section of this
notice.
Case History
This investigation was initiated on July 2, 1997. See Initiation of
Antidumping Duty Investigation: Fresh Atlantic Salmon From Chile, 62 FR
37027 (July 10, 1997) (Initiation Notice). Since the initiation of the
investigation, the following events have occurred:
On July 12, 1997, the United States International Trade Commission
(the ITC) preliminarily determined that there is a reasonable
indication that imports of the product under investigation are
materially injuring the United States industry.
On July 21, 1997, the Department invited interested parties to
submit comments regarding selection of respondents and model matching.
After considering those comments, on August
[[Page 2665]]
26, 1997, the Department selected the following companies as
respondents in this investigation: Pesquera Mares Australes Ltda.
(Mares Australes); Marine Harvest Chile (Marine Harvest); Aguas Claras
S.A. (Aguas Claras); Pesquera Eicosal Ltda. (Eicosal); and Cia.
Pesquera Camanchaca S.A. (Camanchaca) (collectively ``respondents'').
See Selection of Respondents, below. On the same date, the Department
issued an antidumping questionnaire to the selected respondents.
1
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\1\ Section A of the questionnaire requests general information
concerning a company's corporate structure and business practices,
the merchandise under investigation that it sells, and the manner in
which it sells that merchandise in all of its markets. Section B
requests a complete listing of all home market sales, or, if the
home market is not viable, of sales in the most appropriate third-
country market. Section C requests a complete listing of U.S. sales.
Section D requests information on the cost of production of the
foreign like product and the constructed value of the merchandise
under investigation.
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The respondents submitted their initial responses to that
questionnaire in September and October of 1997. After analyzing these
responses, we issued supplemental questionnaires to the respondents to
clarify or correct the initial questionnaire responses.
On October 6, 1997, the Coalition for Fair Atlantic Salmon Trade
(the petitioners) requested that the Department initiate a sales-below-
cost investigation with respect to sales in Canada by Aguas Claras.
2 The petitioners' allegation was timely, and provided
reasonable grounds to believe that Aguas Claras had made sales below
cost in Canada. Therefore, in accordance with section 773(b) of the
Act, on October 21, 1997, we initiated a sales-below-cost investigation
with respect to Aguas Claras' sales to Canada. See Cost of Production,
below.
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\2\ The petition had demonstrated reasonable grounds to believe
that Chilean producers/exporters of the foreign like product had
made sales below cost in Japan and Brazil, and the Department had
initiated country-wide cost investigations with respect to these
markets. However, the petition did not make an allegation of sales
below cost with respect to Canada. See Initiation Notice at 37029.
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On October 17, 1997, in accordance with section 773(a)(1) of the
Act, the Department determined that a particular market situation
existed in the home market that rendered sales in that market an
inappropriate basis for comparison to U.S. sales. The Department
requested that Eicosal and Mares Australes, the two respondents that
had provided a response to Section B of our questionnaire based on home
market sales, provide a revised response based on sales to Japan, the
only viable third-country market for those two companies. Eicosal and
Mares Australes complied with this request, but argued that to the
extent that the Department considered that the home market presents a
particular market situation, it should find that Japan also presents a
particular market situation. See Selection of Comparison Markets,
below.
On October 17, 1997, the petitioners filed a timely request for a
50-day postponement of the preliminary determination. Absent compelling
reasons to deny this request, and in accordance with section
733(c)(1)(A) of the Act and section 353.15(c) of the Department's
regulations, on October 23, 1997, the Department postponed the
preliminary determination until not later than January 8, 1998. See
Notice of Postponement of Preliminary Antidumping Determination: Fresh
Atlantic Salmon from Chile, 62 FR 56151 (October 29, 1997).
Postponement of Final Determination
Section 735(a)(2) of the Act provides that a final determination
may be postponed until not later than 135 days after the date of the
publication of the preliminary determination, if in the event of an
affirmative preliminary determination, a request for such postponement
is made by exporters who account for a significant proportion of
exports of the subject merchandise.
On December 18, 1997, the respondents in this investigation, who
account for a significant proportion of exports of subject merchandise,
made such a request. In their request for an extension of the deadline
for the final determination, the respondents consented to the extension
of provisional measures to no longer than six months. Since this
preliminary determination is affirmative, and there is no compelling
reason to deny the respondents' request, we have extended the deadline
for issuance of the final determination until the 135th day after the
date of publication of this preliminary determination in the Federal
Register.
Period of Investigation
The period of investigation (POI) is April 1, 1996, through March
31, 1997. This period corresponds to each respondent's four most recent
fiscal quarters prior to the month of the filing of the petition (i.e.,
June 1996).
Scope of Investigation
The scope of this investigation covers fresh, farmed Atlantic
salmon, whether imported ``dressed'' or cut. Atlantic salmon is the
species Salmo salar, in the genus Salmo of the family salmoninae.
``Dressed'' Atlantic salmon refers to salmon that has been bled,
gutted, and cleaned. Dressed Atlantic salmon may be imported with the
head on or off; with the tail on or off; and with the gills in or out.
All cuts of fresh Atlantic salmon are included in the scope of the
investigation. Examples of cuts include, but are not limited to:
crosswise cuts (steaks), lengthwise cuts (fillets), lengthwise cuts
attached by skin (butterfly cuts), combinations of crosswise and
lengthwise cuts (combination packages), and Atlantic salmon that is
minced, shredded, or ground. Cuts may be subjected to various degrees
of trimming, and imported with the skin on or off and with the ``pin
bones'' in or out.
Excluded from the scope are (1) fresh Atlantic salmon that is ``not
farmed'' (i.e., wild Atlantic salmon); (2) live Atlantic salmon; and
(3) Atlantic salmon that has been subject to further processing, such
as frozen, canned, dried, and smoked Atlantic salmon, or processed into
forms such as sausages, hot dogs, and burgers.
The merchandise subject to this investigation is classifiable as
item numbers 0302.12.0003 and 0304.10.4093 of the Harmonized Tariff
Schedule (HTS) of the United States. Although the HTS statistical
reporting numbers are provided for convenience and customs purposes,
the written description of the merchandise is dispositive.
Class or Kind
We have preliminarily determined that the products subject to this
investigation comprise a single class or kind of merchandise. Our
determination is based on an evaluation of the criteria set forth in
Diversified Products v. United States, 572 F. Supp. 883, 889 (CIT 1983)
(Diversified Products), which look to differences in: (1) The general
physical characteristics of the merchandise, (2) the expectations of
the ultimate purchaser, (3) the ultimate use of the merchandise, (4)
the channels of trade in which the merchandise moves, and (5) cost. In
making this determination, we have rejected a request by two of the
respondents in this investigation, Mares Australes and Eicosal, that
the Department determine that there are two separate classes or kinds
of merchandise subject to investigation: (1) Fresh whole dressed
Atlantic salmon, and (2) fresh Atlantic salmon meat. See letter from
Arnold & Porter to Department of Commerce (November 3, 1997). In our
analysis of the Diversified Products criteria, we found first, with
respect to physical differences, that although certain differences
between the two forms of the
[[Page 2666]]
merchandise exist, these differences have not been shown to outweigh
the similarities among the products. With respect to the expectations
of the ultimate purchaser and the ultimate use of the merchandise, we
found that both whole dressed salmon and salmon cuts are ultimately
destined for human consumption. Moreover, even if we were to consider
restaurants/supermarkets as the ``ultimate purchaser,'' there is
insufficient evidence to support the respondents' claim that whole
salmon is sold to gourmet restaurants and fillets of salmon are sold to
supermarkets and warehouse retailers. Finally, with respect to cost, we
found while there is a cost difference involved in the additional
cutting procedure required to make a fillet from a dressed fish, that
difference alone is not significant enough to warrant a finding that
there are two classes or kinds of merchandise. For a more detailed
discussion of our preliminary determination with respect to the class
or kind issue, see Memorandum from Gary Taverman to Richard W.
Moreland, Fresh Atlantic Salmon from Chile: Issues Concerning the
Preliminary Determination of Sales at Less Than Fair Value (January 8,
1998) (Preliminary Determination Memorandum).
Selection of Respondents
Section 777A(c)(1) of the Act directs the Department to calculate
individual dumping margins for each known exporter and producer of the
subject merchandise. However, section 777A(c)(2) of the Act gives the
Department discretion, when faced with a large number of exporters/
producers, to limit its examination to a reasonable number of such
companies if it is not practicable to examine all companies. Where it
is not practicable to examine all known producers/exporters of subject
merchandise, this provision permits the Department to investigate
either: (1) A sample of exporters, producers, or types of products that
is statistically valid based on the information available at the time
of selection, or (2) exporters and producers accounting for the largest
volume of the subject merchandise that can reasonably be examined.
After consideration of the complexities expected to arise in this
proceeding (including issues of model matching, market viability, and
cost of production), and the resources available to the Department, we
determined that it was not practicable in this investigation to examine
all known producers/exporters of subject merchandise. Instead, we found
that given our resources we would be able to investigate the five
producers/exporters with the greatest export volume, as identified
above. These companies accounted for slightly less than 50 percent of
all known exports of the subject merchandise during the POI. For a more
detailed discussion of respondent selection in this investigation, see
Memorandum from the Team to Richard W. Moreland, (August 26, 1997)
(Respondent Selection Memorandum).
Product Comparisons
Pursuant to section 771(16) of the Act, all products produced by
the respondents that fit the definition of the scope of the
investigation and were sold in the comparison third-country markets
during the POI fall within the definition of the foreign like product.
We have relied on three criteria to match U.S. sales of subject
merchandise to comparison market sales of the foreign like product:
form, grade, and weight band. We have determined that it is generally
not possible to match across forms, grades, or weight bands, because
there are significant differences among products that cannot be
accounted for by means of a difference-in-merchandise adjustment. (The
exception to this general rule is that dressed salmon with gills in can
be compared to dressed salmon with gills out, after making a
difference-in-merchandise adjustment.) Therefore, we have compared U.S.
sales to comparison market sales of identical merchandise, and have not
compared U.S. sales to comparison market sales of similar merchandise.
A detailed description of the matching criteria, as well as our
matching methodology, is contained in the Preliminary Determination
Memorandum.3
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\3\ Certain respondents contend that, in the Japanese market,
there is a distinction between premium and super-premium salmon.
While we have accepted this claim for the preliminary determination,
we intend to examine this issue thoroughly at verification.
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Fair Value Comparisons
To determine whether sales of fresh Atlantic salmon from Chile were
made in the United States at less than fair value, we compared the
export price (EP) or constructed export price (CEP) to the normal value
(NV), as described in the Export Price and Constructed Export Price and
Normal Value sections of this notice. In accordance with section
777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs and
CEPs for comparison to weighted-average NVs.
Export Price and Constructed Export Price
In accordance with section 772 of the Act, we calculated either an
EP or a CEP, depending on the nature of each sale. Section 772(a) of
the Act defines EP as the price at which the subject merchandise is
first sold before the date of importation by the exporter or producer
outside the United States to an unaffiliated purchaser in the United
States, or to an unaffiliated purchaser for exportation to the United
States. Section 772(b) of the Act defines CEP as the price at which the
subject merchandise is first sold in the United States before or after
the date of importation, by or for the account of the producer or
exporter of the merchandise, or by a seller affiliated with the
producer or exporter, to an unaffiliated purchaser, as adjusted under
sections 772 (c) and (d) of the Act.
Consistent with these definitions, we have found that Aguas Claras,
Mares Australes, and Camanchaca made EP sales during the POI. These
sales are properly classified as EP sales because they were made by the
exporter or producer outside the United States to unaffiliated
customers in the United States prior to the date of importation. We
note that the Aguas Claras EP sales were indirect (i.e., these sales
were made through an affiliated U.S. reseller that facilitated the
processing of sales documentation).
We also found that all the respondents made CEP sales during the
POI. Marine Harvest and Aguas Claras made sales through an affiliated
reseller in the United States after the date of importation. Mares
Australes, Eicosal, and Camanchaca made sales classifiable as CEP sales
because the sales were made for the account of the producer/exporter by
an unaffiliated consignment agent in the United States after the date
of importation.4
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\4\ On October 31, 1997, the petitioners alleged that
respondents Mares Australes, Camanchaca, and Eicosal are affiliated
with their U.S. consignment sellers because the nature of a
consignment relationship is such that the consignment seller
controls the exporter. We have not adopted that position for this
preliminary determination. In recent cases involving consignment
sales of agricultural products, we explicitly recognized that a
consignment relationship does not per se establish affiliation
between the producer and the consignment seller. See, e.g., Certain
Fresh Cut Flowers from Colombia; Final Results and Partial
Rescission of Antidumping Duty Administrative Review, 62 FR 53287,
53295 (October 14, 1997) (rejecting petitioners' contention that
``any consignment sale implies affiliation between the exporter and
the consignment importer''). Beyond the consignment nature of the
relationship between the parties, the evidence on the record does
not warrant a finding of affiliation. For a further discussion of
this issue, see Preliminary Determination Memorandum.
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[[Page 2667]]
In their original questionnaire responses, Mares Australes,
Eicosal, and Camanchaca reported prices based on the aggregated
revenues reported periodically by unaffiliated consignment sellers.
Because it is the Department's preference to examine transaction-
specific data wherever possible, we requested that these three
respondents prepare a listing of all sales made by unaffiliated
consignment sellers to their U.S. customers. See letters from
Department of Commerce to Arnold & Porter (October 31, 1997) (regarding
sales by Eicosal and Camanchaca), and (November 20, 1997) (regarding
sales by Mares Australes). The respondents complied with this request,
but argued that since this data is not normally in their possession,
the Department should instead rely on prices calculated on the basis of
the aggregated revenues reported by the unaffiliated consignment
sellers. See letters from Arnold & Porter to Department of Commerce
(November 18, 1997) (submitting sales data for Eicosal and Camanchaca),
and (December 8, 1997) (submitting sales data for Mares Australes).
Given the Department's preference for transaction-specific data, we
have relied on that data for this preliminary determination.
For all respondents, we calculated EP and CEP, as appropriate,
based on packed prices charged to the first unaffiliated customer in
the United States. (Where sales were made through consignment sellers,
we did not consider the consignment seller to be the customer; rather,
the relevant customer was the consignment seller's customer.) We based
the date of sale on the date of the invoice issued to the U.S.
customer.
In accordance with section 772(c)(2) of the Act, we reduced the EP
and CEP by movement expenses and export taxes and duties, where
appropriate.
Section 772(d)(1) of the Act provides for additional adjustments to
the CEP. Generally, where sales were made through an unaffiliated
consignment seller for the account of the exporter, we deducted
commissions from the CEP.5 Where sales were made through an
affiliated reseller, we deducted direct and indirect selling expenses
that related to commercial activity in the United States.
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\5\ Consistent with our practice, we did not deduct from the CEP
the expenses of the unaffiliated consignment seller, since such
expenses are effectively covered by the commission charged by the
consignment seller to the producer/exporter. See, e.g., Certain
Fresh Cut Flowers from Colombia; Final Results and Partial
Rescission of Antidumping Duty Administrative Review, 62 FR 53287,
53295 (October 14, 1997).
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Section 772(d)(3) of the Act requires that the CEP be adjusted for
the profit allocated to the selling expenses of a producer/exporter's
affiliated reseller. For Marine Harvest and Aguas Claras, which made
sales through affiliated resellers, we calculated a CEP profit ratio
following the methodology set forth in section 772(f) of the Act.
We made company-specific adjustments as follows:
Aguas Claras. We based EP and CEP on delivered or C&F prices to
unaffiliated customers in the United States. For both EP and CEP sales,
we made deductions from the starting price, where appropriate, for
movement expenses including foreign inland freight from the plant to
Santiago airport, international air freight/insurance, and U.S.
brokerage and handling fees and port charges. We also made deductions
for post sale price adjustments corresponding to quality claims.
In addition, for CEP sales, we made deductions for U.S. inland
freight to the customer, imputed credit, direct advertising, export
documentation fees, quality control/inspection fees, and U.S. repacking
costs.
Camanchaca. We based EP on either delivered, CIF Miami airport, or
delivered, C&F Los Angeles airport, prices to unaffiliated customers in
the United States. We based CEP on either delivered to customer or
delivered FOB warehouse prices to unaffiliated customers of the
consignment seller. For both EP and CEP sales, we made deductions from
the starting price, where appropriate, for movement expenses including
foreign inland freight from plant to Santiago airport, international
air freight, transportation insurance from plant to final destination,
and customs export documentation fees.
In addition, for CEP sales, we made deductions for U.S. customs
duties, handling and warehousing fees, U.S. inland freight from the
consignee to customer, as well as imputed credit, direct advertising,
and wire transfer fees.
Eicosal. We based CEP on either FOB Miami, or delivered prices to
the unaffiliated consignment seller's customers in the United States.
We made deductions from the starting price, where appropriate, for
movement expenses including foreign inland freight from plant to
Chilean port of exit, international air freight, Chilean brokerage and
handling fees, and U.S. inland freight from warehouse to customer. We
also deducted post-sale price adjustments, including quality claims and
invoicing errors; imputed credit; direct advertising; quality control/
inspection fees; expenses for maintaining bank accounts in the United
States for sales of the subject merchandise; and expenses associated
with gill tags. We made an upward adjustment to the starting price for
duty drawback.
Mares Australes. We based EP and CEP on either ex-factory, C&F U.S.
port, or FOB Santiago prices to unaffiliated customers in the United
States. For both EP and CEP sales, we made deductions from the starting
price, where appropriate, for movement expenses including foreign
inland freight from plant to Santiago airport, international air
freight, U.S. customs duty, U.S. brokerage and handling, and post sale
price adjustments including quality claims and a consignment broker's
surcharge.
In addition, for CEP sales, we made deductions for U.S. inland
freight from the consignee to customer, as well as for imputed credit,
direct advertising, Chilean customs export documentation fees, and
quality control/inspection fees.
Marine Harvest. We based CEP on FOB U.S. port and delivered prices
to unaffiliated customers in the United States. We made deductions from
the starting price, where appropriate, for movement expenses including
foreign inland freight from plant to Santiago airport, international
air freight, U.S. customs duty, U.S. brokerage and handling, and post
sale price adjustments including quality claims and rebates. In
addition, we deducted U.S. inland freight from the port to the
affiliated reseller and from the affiliated reseller to customer, as
well as indirect selling expenses incurred by the affiliated reseller,
repacking costs, imputed credit, inventory carrying costs, advertising,
Chilean customs fees, quality control/inspection fees, and Association
membership fees.
Normal Value
A. Selection of Comparison Markets
Section 773(a)(1) of the Act directs that NV be based on the price
at which the foreign like product is sold in the home market (or third
country market), provided that the merchandise is sold in sufficient
quantities (or value, if quantity is inappropriate) and that there is
no particular market situation that prevents a proper comparison with
the EP or CEP. The statute contemplates that quantities (or value) will
normally be considered insufficient if they are less than five percent
of the aggregate
[[Page 2668]]
quantity (or value) of sales of the subject merchandise to the United
States.
In their responses to our antidumping questionnaires, Mares
Australes and Eicosal claimed that NV should be based on home market
sales because the home market was viable. Marine Harvest and Aguas
Claras indicated that their respective home markets were not viable,
and claimed that NV should instead be based on sales to Japan and
Canada, respectively, the only viable third-country market for each of
these companies. Camanchaca stated that it had no viable comparison
market at all, and claimed that NV should be based on the constructed
value.
In determining the appropriate comparison market for each
respondent, we examined several issues, as discussed in detail in the
Preliminary Determination Memorandum. First, we determined that Chile
was not an appropriate comparison market for Mares Australes and
Eicosal because a particular market situation existed in Chile. Our
determination was based on record evidence indicating that this market
involves almost exclusively ``industrial'' or ``off-quality'' grades
sold directly from the factory depending on availability. Since the
Chilean market is incidental to the respondents, it is not appropriate
for comparison with the U.S. market, which is one of the respondents'
primary marketing targets and which involves sales of primarily high-
grade ``premium'' salmon made through distributors.
After rejecting the use of the home market for Mares Australes and
Eicosal, we determined that Japan is the appropriate comparison market
for Mares Australes, Eicosal, and Marine Harvest. In making this
determination, we rejected a contention by Mares Australes and Eicosal
that, by the logic of the Department's decision to reject the home
market, the Department should also find that Japan presents a
particular market situation. We determined that the Japanese market,
unlike the home market, is not incidental to the respondents. Sales to
that market involve export-quality merchandise which, while often
different in grade from merchandise sold in the United States, is not
so different as to render the Japanese market as a whole an unsuitable
basis for NV. By contrast, as explained above, the merchandise sold in
the home market involved a relatively small volume of merchandise that
was not of export-quality. Further, we note that the Department's
decision to reject the use of the home market was predicated in part on
the manner in which the foreign like product is sold in that market.
Sales in Chile are made directly from the respondents' processing
facilities, with no guarantee of quality, on an ``as available'' basis.
By contrast, sales to both the United States and Japan involve much
more elaborate distribution systems, which are designed to ensure
customer satisfaction. In view of these considerations, we determined
that Japan could serve as a proper market on which to base NV.
We note that for Eicosal and Marine Harvest, we were unable to find
any appropriate price-to-price comparisons based on sales to Japan for
this preliminary determination. Accordingly, for these companies we
compared all U.S. sales to constructed value (CV), i.e., the cost of
the merchandise sold in the United States as if it were sold in Japan.
However, for Mares Australes we were able to make price-to-price
comparisons for some U.S. sales.
For Aguas Claras, we determined that the appropriate comparison
market is Canada. For this company, we were able to find appropriate
price-based NV matches for some U.S. sales; for the others, we resorted
to CV. Finally, we based NV for Camanchaca entirely on CV, as that
company did not have a viable comparison market.
Adjustments made in deriving the NVs for each company are described
in detail in Calculation of Normal Value Based on Third-Country Prices
and Calculation of Normal Value Based on Constructed Value, below.
B. Cost of Production Analysis
We tested whether comparison market sales were made below cost for
all respondents except Camanchaca, which did not have a viable
comparison market. Although Eicosal and Marine Harvest did not have
comparison market sales of comparable merchandise during the POI, we
performed a cost analysis based upon the petitioners' timely cost
allegation for purposes of determining the proper basis for calculation
of profit for CV.
Based on an allegation contained in the petition, we found
reasonable grounds to believe or suspect that sales of fresh Atlantic
salmon made in Japan and Brazil were made at prices below the cost of
production (COP). See Initiation Notice, 62 FR at 37029, and Memorandum
from the Team to Richard Moreland, (July 1, 1997) (Initiation
Checklist), at 10. In addition, based on a timely allegation filed by
the petitioners on October 6, 1997, the Department found reasonable
grounds to believe or suspect that sales made by Aguas Claras in Canada
were made at prices below the COP. See Memorandum from the Team to
Richard Moreland, Regarding Petitioners' Allegation of Sales Below the
Cost of Production for Aguas Claras (October 21, 1997). As a result,
the Department has conducted investigations to determine whether the
respondents made sales in their respective third-country markets at
prices below their respective COPs during the POI within the meaning of
section 773(b) of the Act.
1. Calculation of COP. In accordance with section 773(b)(3) of the
Act, we calculated a weighted-average COP for each form of fresh
Atlantic salmon, based on the sum of the cost of materials, fabrication
and general expenses, and packing costs. We relied on the COP data
submitted by each respondent in its supplementary cost questionnaire
response, except, as discussed below, in specific instances where the
submitted costs were not appropriately quantified or valued.
Aguas Claras. We revised Aguas Claras' financial expenses to
exclude an offset for accounts receivables and finished goods
inventory.
Camanchaca. We revised Camanchaca's financial expenses to reflect
the ratio of net financial expenses to cost of goods sold, consistent
with our general practice in the calculation of financial expenses.
Eicosal. We recalculated Eicosal's net financial expense on the
basis of the consolidated financial expenses of Eicosal's parent
company, Sociedad Pesquera Eicosal S.A. We also recalculated Eicosal's
general & administrative (G&A) expenses to exclude an affiliated
company's G&A expenses.
Mares Australes. We revised Mares Australes' financial expenses to
exclude an offset for accounts receivables and finished goods
inventory. We also rejected Mares Australes' claim that the calculation
of costs should not include the costs associated with a particular
group of salmon that had reached sexual maturation prior to harvesting
(i.e., salmon that had reached a ``grilse'' stage), because we found
that the respondent did not adequately support its claim that this is
an unusual, isolated event. We relied on the average cost to produce
all groups of salmon sold during the POI.
Marine Harvest. We increased the reported cost of eggs and feed
purchased from affiliated parties to reflect the difference between
transfer prices and market prices, since the transfer prices were below
market prices.
2. Test of Third-Country Comparison Market Sales Prices. We
compared the adjusted weighted-average COP for each
[[Page 2669]]
respondent to the third-country comparison market sales of the foreign
like product as required under section 773(b) of the Act (except for
Camanchaca, which had no viable comparison market), in order to
determine whether these sales had been made at prices below the COP
within an extended period of time in substantial
quantities,6 and whether such prices were sufficient to
permit the recovery of all costs within a reasonable period of time.
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\6\ In accordance with section 773(b)(2)(C)(i) of the Act, we
determined that sales made at below the COP were made in substantial
quantities if the volume of such sales represented 20 percent or
more of the volume of sales under consideration for the
determination of normal value. We note that on December 18, 1997,
the respondents submitted a letter arguing that fresh Atlantic
salmon is a highly perishable product and that the Department should
not use the 20-percent ``substantial quantities'' test, but instead
apply the test set forth by section 773(b)(2)(C)(ii) of the Act
(which compares the average sales price to the average unit cost for
the period). Because the respondents did not raise their argument
until shortly before the issuance of this preliminary determination,
we have not had an adequate opportunity to consider it. We have
therefore relied on the standard 20 percent test, which has been
used in past investigations involving salmon. See Final
Determination of Sales at Less Than Fair Value: Fresh and Chilled
Atlantic Salmon from Norway 56 FR 7661 (February 25, 1991). However,
we intend to examine this issue further for the final determination
of this investigation.
---------------------------------------------------------------------------
On a product-specific basis, we compared the revised COP to the
third-country comparison market prices, less any applicable movement
charges, taxes, rebates, commissions and other direct and indirect
selling expenses.
3. Results of the COP Test. After performing the COP test, we
determined that Aguas Claras, Eicosal, Marine Harvest, and Mares
Australes made third-country comparison market sales of certain
products at prices below the COP, within an extended period of time in
substantial quantities. Further, we found that the sales prices did not
permit for the recovery of costs within a reasonable period of time. We
therefore excluded these sales from our analysis.
For Aguas Claras and Mares Australes, which had sales of comparable
merchandise during the POI, we did not conduct price-to-price
comparisons where all sales of a particular product were made at prices
below the COP. Instead, we based NV on CV, and calculated profit for CV
on the basis of third-country sales that did not fail the cost test.
See Calculation of Normal Value Based on Constructed Value, below. For
Marine Harvest and Eicosal, which had no sales of comparable
merchandise in the third-country market that would permit price-to-
price comparisons, the finding of sales below cost affected only the
calculation of profit for CV, inasmuch as profit for these companies
was based only on third-country sales that did not fail the cost test.
C. Calculation of Normal Value Based on Third-Country Prices
We performed price-to-price comparisons where there were sales of
comparable merchandise in the third-country market that did not fail
the cost test. Such comparisons were possible only for Aguas Claras and
Mares Australes.
Aguas Claras. We calculated NV based on delivered or C&F prices,
and made deductions from the starting price, where appropriate, for
movement expenses including inland freight and insurance from the plant
to the Chilean airport, international air freight and insurance,
customs export documentation fee, and U.S. brokerage and handling fees.
We also adjusted the starting price for quality claims. In addition, we
made circumstance of sale (COS) adjustments for direct expenses, where
appropriate, in accordance with section 773(a)(6)(C)(iii) of the Act.
These included imputed credit expenses and quality control/inspection
fees. In accordance with section 773(a)(6)(A) and (B) of the Act, we
deducted third country market packing costs and added U.S. packing
costs.
As discussed in the Level of Trade/CEP Offset section of this
notice below, we preliminarily determined that it was appropriate to
make a CEP offset to NV.
Mares Australes. We calculated NV based on C&F Japanese port or FOB
Santiago prices to unaffiliated customers and made deductions, where
appropriate, from the starting price for inland freight from the plant
to Santiago airport and international air freight. We adjusted for COS
differences in imputed credit expenses, quality control/inspection
fees, Chilean customs export document fees, repacking costs, and direct
advertising expenses.
D. Calculation of Normal Value Based on Constructed Value
Section 773(a)(4) of the Act provides that where NV cannot be based
on comparison market sales, NV may be based on CV. Accordingly, for
those fresh Atlantic salmon products for which we could not determine
the NV based on comparison market sales, either because (1) there were
no sales of a comparable product (as was the case for Eicosal, Marine
Harvest, and Camanchaca) or (2) all sales of the comparison product
failed the COP test (as was the case for Aguas Claras and Mares
Australes, with respect to certain products), we based NV on CV.
Section 773(e)(1) of the Act provides that CV shall be based on the
sum of the cost of materials and fabrication for the foreign like
product, plus amounts for selling, general, and administrative expenses
(SG&A), profit, and U.S. packing costs. For each respondent, we
calculated the cost of materials and fabrication based on the
methodology described in the Calculation of COP section of this notice,
above. Except for Camanchaca, for every respondent we based SG&A and
profit on the actual amounts incurred and realized by the respondent in
connection with the production and sale of the foreign like product in
the ordinary course of trade for consumption in the comparison market,
in accordance with section 773(e)(2)(A) of the Act. Because there is no
viable comparison market for Camanchaca, and hence no actual company-
specific profit and SG&A data available for Camanchaca, we calculated
profit and indirect selling expenses in accordance with section
773(e)(2)(B)(iii) of the Act and the SAA at 841. Specifically, the SAA
at 841 provides that where, due to the absence of data, the Department
cannot determine amounts for profit under alternatives (i) or (ii) of
section 773(e)(2)(B) of the Act or a ``profit cap'' under alternative
(iii) of section 773(e)(2)(B) of the Act, the Department may apply
alternative (iii) on the basis of the facts available. In this case, we
are unable to determine an amount for profit under alternatives (i) or
(ii) or a profit cap under alternative (iii) because none of the
respondents have viable home markets. See 19 CFR 405(b)(2) of the
Department's revised regulations (clarifying that under section
773(e)(2)(B) of the Act, ``foreign country'' means the country in which
the merchandise is produced), (62 FR 27296, 27412-13 (May 19, 1997)).
As a result, we are applying alternative (iii) on the basis of the
facts available consistent with the SAA. As facts available, we
calculated Camanchaca's profit and indirect selling expenses based on
the weighted-average actual profit and indirect selling expenses of the
other respondents in connection with the production and sale of the
foreign like product in the ordinary course of trade for consumption in
their respective comparison markets.
In addition, for each respondent we used U.S. packing costs as
described in the Export Price and Constructed Export Price section of
this notice, above.
We made adjustments to CV for differences in COS in accordance with
section 773(a)(8) of the Act and 19 CFR 353.56. For comparisons to EP,
we made
[[Page 2670]]
COS adjustments by deducting direct selling expenses incurred on third-
country market sales and adding U.S. direct selling expenses. For
comparisons to CEP, we made COS adjustments by deducting direct selling
expenses incurred on third-country market sales and adding U.S. direct
selling expenses except those deducted from the starting price in
calculating CEP pursuant to section 772(d) of the Act. We also made
adjustments, where applicable, for indirect selling expenses incurred
on third-country market sales to offset U.S. commissions in EP and CEP
comparisons; specifically, we deducted from NV the lesser of (1) the
amount of commission paid on a U.S. sale for a particular product, or
(2) the amount of indirect selling expenses incurred on the third-
country market sales for a particular product.
Level of Trade/CEP Offset
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (LOT) as the EP or CEP transaction. The NV LOT
is that of the starting-price sales in the comparison market or, when
NV is based on CV, that of the sales from which we derive SG&A expenses
and profit. For EP, the U.S. LOT is also the level of the starting-
price sale, which is usually from exporter to importer. For CEP, it is
the level of the constructed sale from the exporter to the importer.
To determine whether NV sales are at a different LOT than EP or
CEP, we examine stages in the marketing process and selling functions
along the chain of distribution between the producer and the
unaffiliated customer. If the comparison-market sales are at a
different LOT, and the difference affects price comparability, as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison-market sales at the LOT of
the export transaction, we make an LOT adjustment under section
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is
more remote from the factory than the CEP level and there is no basis
for determining whether the difference in the levels between NV and CEP
affects price comparability, we adjust NV under section 773(a)(7)(B) of
the Act (the CEP offset provision). See Notice of Final Determination
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel
Plate from South Africa, 62 FR 61731 (November 19, 1997).
In implementing these principles in this investigation, we obtained
information from each respondent about the marketing stage involved in
the reported U.S. and third-country market sales, including a
description of the selling activities performed by the respondents for
each channel of distribution. In identifying levels of trade for EP and
third-country market sales we considered the selling functions
reflected in the starting price before any adjustments. For CEP sales,
we considered only the selling activities reflected in the price after
the deduction of expenses and profit under section 772(d) of the Act.
We expect that, if claimed levels of trade are the same, the functions
and activities of the seller should be similar. Conversely, if a party
claims that levels of trade are different for different groups of
sales, the functions and activities of the seller should be dissimilar.
For Mares Australes and Eicosal, we found one level of trade in
Japan and one level of trade in the United States, between which there
were no significant differences. Other than expenses related to
movement, these companies performed few or no selling functions.
Therefore, we preliminarily determine that these companies' Japanese
levels of trade constitute neither more or less advanced stages of
distribution than the levels of trade found in the United States at the
levels of trade of the CEP. Accordingly, no adjustment for differences
in levels of trade is warranted for either company.
For both Aguas Claras and Marine Harvest, we found that there is
one level of trade for sales to Canada and Japan, respectively, and one
level of trade for sales to the United States. As explained below, we
also preliminarily determine that these companies' comparison market
sales are made at a more advance level of trade than that of the CEP.
Aguas Claras makes all sales to Canada and all CEP sales to the
United States through its affiliated consignee, Bowrain Corp.
Information on the record indicates that Bowrain performs the same
services with respect to both groups of sales, including identifying
customers, arranging for handling and storage, and sales support to the
final customer. As noted above, for CEP sales, we consider only the
selling activities reflected in the price after the deduction of
expenses and profit under section 772(d) of the Act. Thus, the level of
trade of Aguas Claras' Canadian sales involves substantially more
selling functions (those performed by Bowrain) than the level of trade
of the CEP. We also note that the level of trade of Canadian sales
differs from that of the CEP with respect to customer class: Canadian
sales by Bowrain Corp. are to Canadian distributors, retailers,
restaurants, and further processors; the customer at the CEP level of
trade is Aguas Claras' reseller, Bowrain Corp. In light of these facts,
we have determined that Aguas Claras' Canadian sales are made at a
different, and more advanced, stage of marketing than the level of
trade of the CEP. Aguas Claras also made indirect EP sales to the
United States that are at a level of trade in the United States that is
not substantially different from that of the level of trade of the CEP.
Similarly, Marine Harvest's comparison market sales are made at a
more advanced stage of marketing than its CEP sales. Marine Harvest
sells in Japan to a trading company that subsequently sells to
processors and fishmongers through layers of wholesalers. The
respondent maintains a sales office in Japan (Marine Harvest Japan)
that coordinates with the trading company. Marine Harvest Japan sets
prices and establishes order quantities with the trading company's
primary wholesaler, coordinating the terms and conditions of the sale
with the trading company. Marine Harvest Japan also assists in
marketing salmon by accompanying the primary wholesaler on sales trips
to secondary wholesalers and by working directly with the secondary
wholesaler's customers. Further, Marine Harvest Japan provides after-
sales service and quality claims. For CEP sales to its affiliated
consignee in the United States, Marine Harvest performs few or no
selling functions other than services related to movement of
merchandise. Thus, Marine Harvest performs fewer selling functions for
sales to the United States, at a different stage of marketing. We
therefore preliminarily determine that Marine Harvest's sales to Japan
are at a more advanced level of trade than the level of trade of the
CEP.
Accordingly, for Aguas Claras and Marine Harvest, a level-of-trade
adjustment is appropriate. However, neither company sells salmon or any
other product at any other level of trade in their comparison markets
than that of their fresh Atlantic salmon sales. Therefore, because the
data available do not permit a determination that there is a pattern of
consistent price differences between sales at different levels of trade
in the comparison markets, section 773(a)(7)(B) of the Act permits a
CEP offset to be made to NV. We granted such an offset equal to the
amount of indirect expenses incurred in the comparison markets, but not
exceeding the amount of the deductions made from the U.S. price in
accordance with 772(d)(1)(D) of the Act. For Aguas
[[Page 2671]]
Claras, we made no LOT adjustment for comparisons to EP.
Finally, with respect to Camanchaca, we did not perform a level-of-
trade analysis because this company does not have a viable comparison
market.
Currency Conversions
We made currency conversions in accordance with section 773A of the
Act. The Department's preferred source for daily exchange rates is the
Federal Reserve Bank. The Federal Reserve Bank publishes daily exchange
rates for Japanese yen, but not for Chilean pesos. For purposes of the
preliminary results, we made conversions of figures denominated in
Japanese yen based on the official exchange rates published by the
Federal Reserve. For conversions of figures involving Chilean pesos, we
relied instead on daily exchange rates published by Dow Jones News/
Retrieval on-line system.
Verification
In accordance with section 782(i) of the Act, we intend to verify
information determined to be acceptable for use in making our final
determination.
Suspension of Liquidation
In accordance with section 733(d) of the Act, we are directing the
Customs Service to suspend liquidation of all entries of fresh Atlantic
salmon from Chile, except for subject merchandise produced and exported
by Camanchaca, Mares Australes, and Marine Harvest (which have de
minimis weighted-average margins), that are entered, or withdrawn from
warehouse, for consumption on or after the date of publication of this
notice in the Federal Register. We are also instructing the Customs
Service to require a cash deposit or the posting of a bond equal to the
weighted-average amount by which the NV exceeds the EP or CEP, as
indicated in the chart below. These instructions suspending liquidation
will remain in effect until further notice. We note that, as stated in
the Case History section of the notice above, we have extended the
provisional measures from four months to no more than six months.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Exporter/Manufacturer margin
percentage
------------------------------------------------------------------------
Aguas Claras............................................... 3.31
Eicosal.................................................... 8.27
Camanchaca................................................. 0.18
Mares Australes............................................ 1.21
Marine Harvest............................................. 1.87
All Others................................................. 5.79
------------------------------------------------------------------------
Section 735(c)(5)(A) of the Act directs the Department to exclude
all zero and de minimis weighted-average dumping margins, as well as
dumping margins determined entirely under facts available under section
776 of the Act, from the calculation of the ``all others'' rate. We
have excluded the de minimis dumping margins for Camanchaca, Mares
Australes, and Marine Harvest from the calculation of the ``all
others'' rate. No dumping margins were based entirely on facts
available.
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final antidumping determination is
affirmative, the ITC will determine whether these imports are
materially injuring, or threaten material injury to, the U.S. industry.
The deadline for that ITC determination would be the later of 120 days
after the date of this preliminary determination or 45 days after the
date of our final determination.
Public Comment
Case briefs must be submitted to the Assistant Secretary for Import
Administration no later than April 13, 1998. Rebuttal briefs will be
due no later than April 20, 1998. A list of authorities used, a table
of contents, and an executive summary of issues should accompany any
briefs submitted to the Department. Executive summaries should be
limited to five pages total, including footnotes.
Section 774 of the Act provides that the Department will hold a
hearing to afford interested parties an opportunity to comment on
arguments raised in case or rebuttal briefs, provided that such a
hearing is requested by any interested party. If a request for a
hearing is made, the hearing will tentatively be held on Monday, April
28, 1998, at 8:30 A.M., at the U.S. Department of Commerce, 14th Street
and Constitution Avenue, N.W., Washington, D.C. 20230. Parties should
confirm by telephone the time, date, and place of the hearing 48 hours
before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request within ten days of
the publication of this notice. Requests should specify the number of
participants and provide a list of the issues to be discussed. Oral
presentations will be limited to issues raised in the briefs.
If this investigation proceeds normally, we will make our final
determination no later than 135 days after the date of publication of
this notice in the Federal Register.
This determination is published pursuant to section 733(f) of the
Act.
Dated: January 8, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-1164 Filed 1-15-98; 8:45 am]
BILLING CODE 3510-DS-P
